S.138 NI Act | Lok Adalat Award in Cheque Bounce Case Executable as Civil Decree: Andhra Pradesh High Court
Sanchayita Lahkar
The High Court of Andhra Pradesh Single Bench of Justice Subba Reddy Satti has held that an execution petition filed by a decree holder to enforce a Lok Adalat award arising out of a complaint under Section 138 of the Negotiable Instruments Act is legally maintainable before a civil court. The Court dismissed the revision petition challenging the executing court's order to commit the judgment debtor to civil prison and held that Lok Adalat awards are enforceable as decrees of civil courts.
The matter arose from a revision petition filed by the judgment debtor against the order dated 02.07.2024 in E.P. No. 29 of 2022 in C.C. No. 1041 of 2016, passed by the Principal Junior Civil Judge, Srikakulam. The underlying dispute originated from a private complaint filed under Section 138 of the Negotiable Instruments Act, 1881. The complaint was referred to Lok Adalat under Lok Adalat Case No. 186 of 2022 by the District Legal Services Authority, Srikakulam.
Both the complainant (decree holder) and the accused (judgment debtor) appeared before the Lok Adalat along with their respective counsels. After negotiation and conciliation, a compromise was reached, and an award was passed under Section 21 of the Legal Services Authority Act, 1987.
According to the terms of the award, the judgment debtor agreed to pay a sum of ₹5,00,000 in full and final settlement. An initial payment of ₹50,000 was made on the day of the award, and the balance of ₹4,50,000 was to be paid in nine equal monthly installments of ₹50,000 each by the 25th of every month. The award also included a clause stating that in the event of default, the complainant would be at liberty to execute the award with interest at the rate of 24% per annum from the date of the award until realisation.
The award was read and explained in Telugu to both parties, and they accepted the terms as true and correct. The Lok Adalat, accordingly, passed an award acquitting the accused for the offence punishable under Section 138 of the Negotiable Instruments Act, invoking Section 147 of the same Act.
Subsequently, when the judgment debtor failed to comply with the payment schedule, the decree holder filed an Execution Petition under Order XXI Rules 37 and 38 of the Code of Civil Procedure, 1908. The decree holder alleged that the judgment debtor had defaulted in paying the remaining ₹4,50,000 and sought an order to commit him to civil prison.
In response, the judgment debtor filed a counter affidavit, claiming that the decree holder had not demanded the balance amount or issued any notice. He stated that he had not refused payment and was willing to pay after a lapse of time.
The executing court conducted an inquiry. The decree holder examined himself as PW1 and marked the Lok Adalat award as Exhibit P1. The judgment debtor, however, did not produce any oral or documentary evidence in support of his claims.
After considering the evidence, the executing court recorded that the judgment debtor possessed movable and immovable properties and had the financial means to pay but had intentionally avoided making the payment. The court allowed the Execution Petition and directed that the judgment debtor be committed to civil prison for three months for failure to comply with the award terms. Aggrieved by this order, the judgment debtor filed the present civil revision petition before the High Court.
At the stage of issuing notice, the High Court had conditionally granted a stay on 04.12.2024, requiring payment of 50% of the decretal amount within two weeks. As this condition was not fulfilled, the interim stay was automatically vacated.
Before the High Court, counsel for the petitioner submitted that since the award arose from a criminal complaint under Section 138 of the Negotiable Instruments Act, an execution petition under the Code of Civil Procedure was not maintainable. It was argued that the decree holder should have invoked Section 421 of the Code of Criminal Procedure for recovery.
The core issue framed for consideration by the Court was whether an award passed by a Lok Adalat in a criminal complaint under Section 138 of the Negotiable Instruments Act could be enforced through a civil court by way of an execution petition.
The Court recorded: “The answer to the above question is no longer res integra.” It referred to the decision of the Hon’ble Supreme Court in K.N. Govindan Kutty Menon v. C.D. Shaji, (2012) 2 SCC 51, where the Apex Court had addressed the exact issue.
The Court noted: “Section 21 of the Legal Services Act contemplates a deeming provision, hence, it is a legal fiction that the 'award' of the Lok Adalat is a decree of a civil court.”
The judgment of the Apex Court had concluded that:
(1) In view of the unambiguous language of Section 21 of the Act, every award of the Lok Adalat shall be deemed to be a decree of a civil court and as such it is executable by that court.
(2) The Act does not make out any such distinction between the reference made by a civil court and a criminal court.
(3) There is no restriction on the power of the Lok Adalat to pass an award based on the compromise arrived at between the parties in respect of cases referred to by various courts (both civil and criminal), tribunals, Family Court, Rent Control Court, Consumer Redressal Forum, Motor Accidents Claims Tribunal and other forums of similar nature.
(4) Even if a matter is referred by a criminal court under Section 138 of the Negotiable Instruments Act, 1881 and by virtue of the deeming provisions, the award passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court.
The High Court also cited Makwana Mangaldas Tulsidas v. State of Gujarat, (2020) 4 SCC 695, where it was held:
“The effect of the above legal proposition is that an award passed at the pre-litigation stage or pre-cognizance stage shall have an effect of a civil decree.”
In Arun Kumar v. Anita Mishra, (2020) 16 SCC 118, the Apex Court stated:
“Every award of the Lok Adalat is, as held in K.N. Govindan Kutty Menon v. C.D. Shaji, deemed to be decree of a civil court and executable as a legally enforceable debt.”
The Division Bench of the then Composite High Court of Andhra Pradesh in Chaluvadi Murali Krishna and another v. District Legal Service Authority, Prakasam District, Ongole and others, AIR 2013 AP 41, also supported this interpretation.
The Court stated: “Thus, given the authoritative pronouncements, the contention of learned counsel for the petitioner, that the execution petition filed by the decree-holder is not maintainable, lacks merit.”
On the issue of the judgment debtor’s financial means, the Court observed: “The executing Court recorded a finding regarding the means of the judgment debtor and his evading payment.” The High Court found no perversity or illegality in the order of the executing court.
The Court held that the execution petition filed by the decree holder to enforce the Lok Adalat award was legally maintainable, observing that there was no perversity or illegality in the order passed by the court below. Finding no merit in the revision, the Court dismissed the civil revision petition without costs, and directed that any pending miscellaneous petitions shall stand closed.
Advocates Representing the Parties
For the Petitioners: P. Nagendra Reddy
Case Title: Rathi Vasudeva Rao v. P.V.R.M. Patnaik
Neutral Citation: APHC010403512024
Case Number: Civil Revision Petition No. 2141 of 2024
Bench: Justice Subba Reddy Satti
[Read/Download order]
